HALF MOON BAY, Calif.--Homesick entrepreneurs longing to return to China or Europe may find the motherland is offering more than a warm embrace: funding by eager investors.

China's stock market has climbed fivefold over the past two years, and efforts are under way to create an emerging market that would cater to younger companies.

"The China market has turned over five times, so it's very, very hot. But there've only been a handful of local companies that have done an IPO," said Kuantai Yeh, managing director of Intel Capital and a panelist Friday at the AlwaysOn Venture Summit West here.

While China's stock market caters to larger companies, Yeh noted that the Chinese government has efforts under way to create a Nasdaq-like market for emerging companies.

The government is also driving efforts to bake innovation into companies, a shift that has been evolving for the past five years, said members on a panel discussing investments in China.

"If you rank innovation, and the U.S. is 100, then China is 50," Yeh said. "If you see a model and can copy it very easily and duplicate it for over 1 billion people with very little R&D, why not do it? But the government is pushing China to develop its own 3G, its own computer standards, autos...and space program."

He added the government is beginning to recognize it can't continue to rely heavily on other countries' innovation to move the country forward and is encouraging businesses to spend more on research and development.

A path between the U.S. and Israel has also been well-trodden by entrepreneurs, noted Danny Cohen, a partner with the Gemini Israel Fund and a speaker on the State of European Venture Capital panel. He said he is increasingly seeing people get their training in the U.S. and then going back to Israel.

"Israel, outside of the U.S., is the most entrepreneurial country," Cohen said. "With valuations much lower than the U.S., about half, I tell people you can get a copy of a Silicon Valley company, but at an attractive price."

In Europe, an abundance of capital is available to companies, said Tod Bensen, founder of Cazenove Private Equity. "Some could even argue some companies are going public that shouldn't," Bensen said. "In Europe, it's a very healthy place to generate an exit (for an investor)."